By Jo Seery Professional Support Lawyer &
Jazmeer Jackson Senior Lawyer
Background
Mr Betancourt was employed by United Kingdom Research and Innovation (UKRI) part time 20 hours a week. There was a dispute about his working pattern from the start of his employment and he was dismissed during his probationary period. He was subject to a contractual six-month probationary period meeting. which required two formal assessments of performance, one at three months and one at six before a dismissal decision could be made. However, UKRI terminated his contract after two months with immediate effect and paid his contractual notice pay of five weeks’ salary despite there being no payment in lieu of notice (PILON) clause in his contract.
Mr Betancourt brought a wrongful dismissal claim, arguing that UKRI had breached his contract by failing to follow the contractual probation procedure and by terminating without notice.
Key Issues
Contractual Notice and Lack of PILON Clause
The Employment Appeal Tribunal (EAT) agreed that, in the absence of an express PILON clause, UKRI’s decision to terminate Mr Betancourt’s employment with immediate effect and offer a lump sum payment in lieu of notice amounted to a breach of contract. The dismissal should have been effected with five weeks’ notice.
Assessment of Damages
The EAT accepted that in a case of wrongful dismissal involving a breach of a contractual procedure it is also necessary to assess when he could have been dismissed.
In Gunton v Richmond-upon -Thames London Borough Council [1980] the Court held that where an employee is dismissed in breach of a contractual procedure the employee may claim damages for the period they would have remained in employment if the procedure had been followed. This is known as the “Gunton extension” because it provides that an employee can claim additional compensation in addition to the notice period.
Reason for the dismissal
The EAT considered that the contractual probationary period was designed to deal with underperformance and that this would require the probation assessment procedure to be completed. However, this was not a case of underperformance as neither party wished to work together to improve performance rather. This meant, the employer was entitled to adopt the least burdensome means of lawfully terminating his contract which would have been with five week’s notice. As Mr Betancourt had been paid five week’s notice pay no further damages were due to him.
Outcome
While the EAT overturned the tribunal’s decision that the dismissal was not wrongful due to the lack of a PILON clause, it dismissed Mr Betancourts claim for additional damages as a result of the employer’s failure to comply with the contractual probationary procedure. As Mr Betancourt had been paid a sum equivalent to his notice pay no additional compensation was payable.
Why This Matters
This case confirms that employers who dismiss without notice must have a contractual right to do so via a PILON clause—or risk a finding of wrongful dismissal. It is also a reminder that if an employer terminates employment early for underperformance in breach of a contractual probationary policy or procedure an employee can claim additional damages.
